April 2019 | Agri Review
01 May 2019

In 2018, FDI in agriculture constituted 15.9 mln. USD. While the total FDI in 2018 was lower than in 2017, FDI in agriculture has significantly increased (by 28.2%). The highest FDI in agriculture was observed in the second quarter of 2018, while there was divestment (negative FDI) in the first quarter of 2018. The divestment was quite small and was followed by a significant increase in other quarters. Given that demand for food is likely to increase in the future, FDI in agriculture is critical for the expansion of agricultural output.

Traditionally, FDI in agriculture is very low compared to FDI in other sectors. During the last decade, the share of FDI in agriculture ranged between 0.5% - 1.5% of total FDI in Georgia. The only year when the share was relatively high was 2009. In 2009, FDI in agriculture constituted 3.4% of total FDI and more than doubled in absolute terms compared to 2008 (10.6 mln. USD in 2008 and 22.3 mln. USD in 2009). In 2018 FDI in agriculture constituted 1.3% of total FDI. The low attractiveness of the sector for FDI is caused by land constraints, outdated technologies, lack of business-oriented producers, and lacking contract farming practices, as well as the lack of specialists in this field.

As to prices, on a monthly basis, the country’s price levels have increased slightly. The Consumer Price Index (CPI) in March 2019 was 1.0% higher compared to the previous month. While in comparison to March 2018, the CPI experienced a 3.7% increase. For food and non-alcoholic beverages, the month-over-month prices increased by 1.3%, contributing 0.4 percentage points to the change in total CPI.